A prisoner's dilemma is a situation in which
a. a change in marginal cost may not lead to a change in price
b. a firm's competitors follow a price increase but ignore a price decrease
c. oligopolists behave irrationally
d. oligopolists attempt to maximize sales rather than profits
e. an oligopolists demand curve may become perfectly inelastic
A
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The value of a model is determined by
A) the usefulness of its predictions in the real world. B) the extent of the profit earned by applying it. C) the realism of its assumptions. D) the model's attention to real world details.
Which of the following is true? a. Price leadership is a form of explicit collusion
b. Price leadership is more likely when there are a substantial number of roughly equally sized firms in oligopoly. c. A price leader is most likely to be a dominant firm in an industry. d. None of the above is true.
Under a system of flexible exchange rates, transactions that increase the supply of the nation's currency to the foreign exchange market will cause the nation's
a. currency to depreciate in value. b. currency to appreciate in value. c. trade deficit to increase. d. products to become more expensive to foreigners.
If an American-based firm opens and operates a new clothing factory in Honduras, then it is engaging in
a. foreign portfolio investment. b. foreign financial investment. c. foreign direct investment. d. indirect foreign investment.